The post Former Governor of the People’s Bank of China Publishes Article Concerning the Cryptocurrency Sector: Issues Warning appeared on BitcoinEthereumNews.com.

Former Governor of the People’s Bank of China, Zhou Xiaochuan, wrote an extensive article on stablecoins and digital payment systems, highlighting the limitations and potential risks of these assets. Key points highlighted in Zhou’s article include: Decentralization isn’t suitable for every financial service: Zhou noted that the notion that “every service needs to be decentralized” is overblown, and that account-based centralized management systems are still operating strongly. Technology is not a sufficient criterion: The success of payment systems depends not only on technical advantages but also on factors such as security and regulatory compliance. Market manipulation and investor risk: Stabilcoin argued that price and market manipulation in the stablecoin markets has not yet been prevented, which magnifies the risk by attracting unqualified investors. Insufficient demand problem: Zhou stated that stablecoins without sufficient usage may not be able to circulate effectively in the market, so they cannot be issued even if a license is obtained. The advantage of existing payment systems: He reminded that the current system, especially in individual payments, has already fallen to very low levels in terms of cost, and the use of stablecoins will not be exempt from regulation costs such as KYC and AML. Zhou noted that stablecoin issuers tend to minimize costs and maximize issuance to gain wider acceptance, an approach similar to central banks’ power to “print money.” However, stablecoin issuers’ lack of understanding of monetary policy and macroeconomic regulations brings with them the risks of uncontrolled issuance and high leverage. Although regulations such as the GENIUS Act in the US and the Stablecoin Law in Hong Kong seek to solve these problems, Zhou stated that current controls are inadequate and drew attention to the following issues: Reserve management: Where and by whom are the reserves of issued stablecoins held is a critical issue.…

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Filed under: News - @ August 30, 2025 7:30 pm